By Jeff Gilbert

DEARBORN (WWJ) – Ford’s 2015 profits will be about $1.5 billion higher than expected, and that will likely lead to higher profit-sharing checks for manufacturing workers and higher bonuses for salaried workers.

This comes as Ford changes the way it reports pension costs to what’s called a “market-to-market” approach. That means Ford will report pension costs as they are incurred, instead of spreading them out over several years.

This can only be done, says Ford Chief Financial Officer Bob Shanks, because Ford has improved its pension liabilities.

“The change better aligns our operating results with our operating cash flow and makes our results more comparable to our major competitors,” says Shanks. “Taking this step was enabled by the pension de-risking strategy we announced in 2012 and have been implementing ever since.”

In 2012, Ford’s pension was underfunded by $19 billion. That gap was cut to $10 billion in 2014, and is expected to be further reduced when 2015 results are reported January 28.

Those results will be higher than originally anticipated.

“Our guidance is presently $8-and-a-half to $9-and-a-half billion,” says Ford Vice President and Corporate Controller Stuart Rowley. “We will revise that to $10 to $11 billion.”

Rowley says the changes are the result of a lot of work, done by a lot of people to help improve Ford’s pension liabilities.

“We’ve been on a journey for the last five years now, very deliberately, very consistently, to fully fund and fully de-risk our global pension plans.”

Connect with Jeff Gilbert
Email: jdgilbert@cbs.com
Facebook: facebook.com/carchronicles
Twitter: @jefferygilbert

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